Before you start investing in precious metals, make sure you know the basics: what is spot, bid & ask, spread and premium?
The spot is the current market-clearing price of gold or silver that is set by factors of supply and demand in the global financial markets. The spot price refers to 1 troy ounce of .999 fine gold or silver.
The bid (or buy as a layman’s term) is the price at which market participants, such as Tavex, are ready to buy gold or silver at any given time.
The ask (or sell as a layman’s term) is the price at which market participants, such as Tavex, are ready to sell gold or silver at any given time.
The spread is the difference between the ask and the bid price. For example, if the bid for a 1 ounce Austrian Philharmonic gold coin is €1500 and the ask price is €1540 then the “bid-ask spread” is €40. A low bid-ask spread is often a good indicator of high liquidity. Products with high liquidity, such as the Gold Philharmonic coin, will have a lower bid-ask spread compared to other less well-known gold coins. This means that you, as an investor, will save money when trading in and out of your investment.
Every product that Tavex sells comes with a premium. A premium is added to cover the cost of the fabrication and distribution of the item. The premium is calculated by taking the price of a product minus the spot price of the metal. For example, if the current spot price of gold is €1520, and if Tavex sells a 1 ounce Gold Philharmonic for €1570 then the premium is €50.
We hope the main terms are clearer now for you – the basics: what is spot, bid & ask, spread and premium.